The Euro: A Crisis of the Currency or a Failure of Politics? Paper from the Colloquium: The Politics and Economics of the Euro Crisis, Institute for European Studies, University of Malta, 2 December 2011

Summary: Overall the monetary pillar of the EMU project has worked well so that it is incorrect to speak of a 'euro' crisis though it is at the epicentre of the present crisis. The origins of the problems it is facing have more to do with the economic component, particularly because of the breach of budgetary rules which points to a failure of politics. Hence the solution must be political, namely a strong commitment by governments to achieve balanced budgets and implement structural reforms so as to lay the basis for improved competitiveness, job creation and sustainable growth.

DEMOCRACY AND CITIZENSHIP IN NORTH AFRICA AFTER THE ARAB AWAKENING: CHALLENGES FOR EU AND US FOREIGN POLICY (EUSPRING). Arab Citizenship Review No. 6, October 2014. EGYPT. The Return to Authoritarianism and the Crisis of Citizenship Rights

Citizenship and democratic rights have been shrinking in Egypt with the rise of president Abd El Fattah El Sisi, widely popular among Egyptians who fear more violence and unrest in an increasingly volatile region. In this EU Spring Policy Brief, Moataz El Fegiery examines the political landscape in the run-up of parliamentary elections, arguing that the short term is likely to see further curtailment of acquired rights, further crackdown on the opposition and consolidation of military power. In the longer term, however, it is in the interest of Egyptian society and institutions as well as of Europe to reverse the politics of exclusion and ensure that freedoms, pluralism and participation prevent the rise of extremism and political violence.

Germany and the Eurocrisis: The timing of politics and the politics of timing. ACES Cases No. 2014.3

This paper speculates on the future of the euro. It uses Germany as a prism for the discussion about what might be done next to bolster the Euro. Researching the future—always a challenging task—is made harder when multiple state actors contend for prominence on the basis of shifting coalitions at home, all while interacting at an international level. That said, almost everyone accepts that German choices will play the central role in the path ultimately chosen. This paper thus foregrounds Germany’s role in shaping the way ahead, and it does so through an explicitly political framework focused primarily on the electoral implausibility of an alternative German policy course.

The euro before the financial crisis of 2008: an integrating and stabilizing factor. Jean Monnet/Robert Schuman Vol. 13 No. 9, June 2013

From the Introduction. The main focus of this study is to examine whether the euro has been an economic, monetary, fiscal, and social stabilizer for the Eurozone. In order to do this, the underpinnings of the euro are analysed, and the requirements and benchmarks that have to be achieved, maintained, and respected are tested against the data found in three major statistics data sources: the European Central Bank’s Statistics Data Warehouse (http://sdw.ecb.europa.eu/), Economagic (www.economagic.com), and E-signal. The purpose of this work is to analyse if the euro was a stabilizing factor from its inception to the break of the financial crisis in summer 2008 in the European Union. To answer this question, this study analyses a number of indexes to understand the impact of the euro in three markets: (1) the foreign exchange market, (2) the stock market, and the Crude Oil and commodities markets, (3) the money market.

Diritti sociali e crisi del costituzionalismo europeo [Social rights and the crisis of European constitutionalism]. WP C.S.D.L.E. “Massimo D’Antona”.INT – 95/2012

In the face of what looks like a real impasse of the the line of European constitutionalism, partly due to an orientation of the Court of Justice which tends to favor the protection of economic freedoms over the protection of social rights, two opposing trends occurr. The first amounts to a new "constitutional patriotism"; the second entrusts the protection of fundamental social rights no longer to a single Chart or to a single court but to a multi-level system of protection. A dialogue between the European courts that truly valorizes fundamental rights, however, might be hindered by what someone has seen as a resurgence of the dualist theories, evident in an ECJ’s decision as Kadi.

The EU’s online gambling regulatory approach and the crisis of legal modernity. EU Centre Singapore Working Paper No. 19, January 2014

Online gambling is a fast growing service activity in the world - its economic significance is clearly shown by the high level of innovation by gambling operators all over the world, as well as by the increasing amount of tax revenues generated in those States that allow this activity. Nevertheless, states face many difficulties in controlling and regulating online gambling, given the specific nature of the Internet, and the never-ending quest by gamblers for new gaming websites that offer superior odds, a wider gaming variety, and greater bets combination. In this working paper, Dr Salvatore Casabona examines the legality of online gambling in the context of the European Union (EU), and discusses the Union's regulatory approach to online gambling, the lack of harmonisation and the issue of member state sovereignty at the crossroad of European Law on online gambling, and the potential for a new regulatory paradigm to emerge.

The EMS Crisis of the 1990s: Parallels with the present crisis? CEPS Working Document No. 393, 28 March 2014

The EMS crisis of the 1990s illustrated the importance of a lack of confidence in price or exchange rate stability, whereas the present crisis illustrates the importance of a lack of confidence in fiscal sustainability. Theoretically the difference between the two should be minor since, in terms of the real return to an investor, the loss of purchasing power can be the same when inflation is unexpectedly high, or when the nominal value of government debt is cut in a formal default. Experience has shown, however, that expropriation via a formal default is much more disruptive than via inflation. The paper starts by providing a brief review of the EMS crisis, emphasising that the most interesting period might be the ‘post-EMS’ crisis of 1993-95. It then reviews in section 2 the crisis factors, comparing the EMS crisis to today’s euro crisis. Section 3 outlines the main analytical issue, namely the potential instability of high public debt within and outside a monetary union. Section 4 then compares the pressure on public finance coming from the crises for the case of Italy. Section 5 uses data on ‘foreign currency’ debt to disentangle expectations of devaluation/inflation from expectations of default. Section 6 concludes.

A Crisis of Democratic Legitimacy? It’s about Legitimation, Stupid! European Policy Brief No. 21, March 2014

Are we witnessing a crisis of democratic legitimacy? While citizens may lose trust in political authorities, democratic principles and ideals continue to exercise considerable appeal. This Policy Brief argues that this paradox must be understood as a crisis of legitimation. Research suggests that legitimacy is inherently subjective and must be constantly re-earned. Low levels of political trust can be explained as the result of the complexity of globalised yet fragmented societies. The present feeling of malaise calls for a redefinition of the relationship between citizens and the authorities by which they are ruled. If popular sovereignty is to mean anything in today’s age, it requires a new legitimising narrative.

Imperial legacy? The EU's Developmental Model and the Crisis of the European Periphery. CES Papers - Open Forum #19, 2013-2014

The high hopes for rapid convergence of Eastern and Southern EU member states are increasingly being disappointed. With the onset of the Eurocrisis convergence has given way to divergence in the southern members, and many Eastern members have made little headway in closing the development gap. The EU´s performance compares unfavourably with East Asian success cases as well as with Western Europe´s own rapid catch-up to the USA after 1945. Historical experience indicates that successful catch up requires that less-developed economies to some extent are allowed to free-ride on an open international economic order. However, the EU´s model is based on the principle of a level-playing field, which militates against such a form of economic integration. The EU´s developmental model thus contrasts with the various strategies that have enabled successful catch up of industrial latecomers. Instead the EU´s current approach is more and more reminiscent of the relations between the pre-1945 European empires and their dependent territories. One reason for this unfortunate historical continuity is that the EU appears to have become entangled in its own myths. In the EU´s own interpretation, European integration is a peace project designed to overcome the almost continuous warfare that characterised the Westphalian system. As the sovereign state is identified as the root cause of all evil, any project to curtail its room of manoeuvre must ultimately benefit the common good. Yet, the existence of a Westphalian system of nation states is a myth. Empires and not states were the dominant actors in the international system for at least the last three centuries. If anything, the dawn of the age of the sovereign state in Western Europe occurred after 1945 with the disintegration of the colonial empires and thus historically coincided with the birth of European integration.

Georgian drift. The crisis of Georgia's way westwards. OSW POINT OF VIEW 57, 2016-02-22

For several years Georgia has been experiencing processes which may be interpreted as symptoms of a deepening, multidimensional social and political crisis. Reforms have lost momentum, stagnation has set in, and in some areas the situation has begun to revert to the pre-revolution status (including rising crime levels). The Georgian political system has found itself in a serious crisis, while society has become increasingly frustrated and apathetic, mainly because people’s standards of living have been stagnating. This political and social malaise has been breeding Euro-scepticism and disenchantment with the West. A country that had been firmly navigating westwards, Georgia has now started drifting and slipping into malaise. This risks reversing what the country has achieved so far in the internal dimension, increasing instability and triggering a crisis in the pro-Western vector of Tbilisi’s foreign policy. While that may not necessarily mean a turn towards Russia, in the present situation it has been easier for Moscow to pursue its own interests in the region. Should Tbilisi’s pro-Western course become reversed or permanently stagnant, that would entail grave consequences for the country itself and beyond. It would be a defeat for the West and would undermine the European aspirations of countries like Ukraine or Moldova.

Europe and the refugees: a crisis of values. EPC Commentary, June 20 2016

20 June is World Refugee Day. This offers an opportunity for the European Union (EU) and its members to reflect on how the EU’s approach towards the current crisis is having an impact on its cohesion and image.

The crisis in Iraq and the twists and turns of Turkish Middle East policy. OSW Commentary No. 142, 29.07.2014

The spectacular offensive by Islamic radicals in Iraq this June has led the country to the verge of collapse, and is another scene of the deep crisis in the Middle East, in which Turkey is entangled. The immediate consequence of this is a severe crisis of prestige after the kidnapping by terrorists of Turkish diplomats and Ankara’s inability to resolve the situation; in the long term consequences include escalation of the Kurdish problem, and a further increase in threats to the security of Turkey itself as well as the fundamental principles of its foreign policy. Both Ankara’s options and its political will to actively respond to the crisis are extremely limited. Yet again in recent years, the current crisis, the broader situation in the Middle East, and finally the position of Turkey in the region elude unambiguous assessments and forecasts – these are prevented by the scale and growth of the reappraisals and tensions in the region. The only undoubted fact is that Turkey is strategically and irreversibly entangled in the Middle East’s problems, which are an important factor affecting the transformation of the state which the ruling AKP is implementing; and in the near future, this state of affairs will only deepen.

The sovereign debt crisis that isn't: Or, How to turn a lending crisis into a spending crisis and pocket the spread. ACES Cases No. 2014.1

It’s a testament to the power of ideas in politics that the ongoing policy disaster in Europe is still referred to, by academic as well as popular commentators, as the European Sovereign Debt Crisis. That there was a crisis in European sovereign debt markets in 2010 through the middle of 2012 is not in doubt. That is was a crisis of European sovereign debt markets generated by ‘too much spending’ should be very much in doubt. The ongoing European economic crisis is in fact a transmuted private sector banking crisis first exacerbated and then calmed by central bank policy, the costs of which have been asymmetrically distributed across European mass publics.

The Eurozone crisis and the erosion of democratic legitimacy: Lessons from the gold standard. ACES Cases No. 2013.3

This paper makes four propositions. First, it argues that the euro’s institutional design makes it function like the interwar gold exchange standard during periods of stress. Just like the gold exchange standard during the 1930s, the euro created a ‘core’ of surplus countries and a ‘periphery’ of deficit countries. The latter have to sacrifice their internal domestic economic equilibrium in order to restore their external equilibrium, and therefore have no choice but to respond to balance of payments crises by a series of deflationary spending, price and wage cuts. The paper’s second claim is that the euro’s institutional design and the EU’s response to its ‘sovereign debt crisis’ during 2010-13 deepened the recession in the Eurozone periphery, as EMU leaders focused almost exclusively on austerity measures and structural reforms and paid only lip service to the need to rebalance growth between North and South. As Barry Eichengreen argued in Golden Fetters, the rigidity of the gold standard contributed to the length and depth of the Great Depression during the 1930s, but also underscored the incompatibility of the system with legitimate national democratic government in places like Italy, Germany, and Spain, which is the basis for the paper’s third proposition: the euro crisis instigated a crisis of democratic government in Southern Europe underlining that democratic legitimacy still mainly resides within the borders of nation states. By adopting the euro, EMU member states gave up their ability to control major economic policy decisions, thereby damaging their domestic political legitimacy, which in turn dogged attempts to enact structural reforms. Evidence of the erosion of national democracy in the Eurozone periphery can be seen in the rise of anti-establishment parties, and the inability of traditional center-left and center-right parties to form stable governments and implement reforms. The paper’s fourth proposition is that the euro’s original design and the Eurozone sovereign debt crisis further widened the existing democratic deficit in the European Union, as manifested in rising anti-EU and anti-euro sentiment, as well as openly Eurosceptic political movements, not just in the euro periphery, but also increasingly in the euro core.